Enemy of the State

Last week, the California State Assembly cleared a bill that aims to reverse the repeal of Net neutrality rules by the Federal Communications Commission earlier in 2018. After a hard-fought battle, the bill is headed to governor Jerry Brown's desk. If it's approved, as expected, it would become California law, thus restoring tight Internet regulations in the state.

The law would mean that all bits running over a carrier's network must be treated the same regardless of ownership. There can be no data favouritism: all content including that of online video services like Netflix can't be slowed down in favour of carriers' own content.

In the same spirit, the proposed legislation also bans service providers from offering so-called zero-rated content, which means that data used while accessing designated content doesn't count against a data cap. In theory, this is a significant development for mobile carriers in the US, where bundles of their original or third-party content have become a trend. For example, T-Mobile offers a standard Netflix subscription to customers of its T-Mobile One unlimited plan, and AT&T is giving away packages including its WarnerMedia shows. Although carriers are pushing unlimited data plans, the bill means they wouldn't be able to prioritise their content when network congestion requires throttling.

The Federal Communications Commission under the Trump administration revoked an Open Internet order passed during the previous presidency, barring Internet service providers from blocking or favouring any particular content. The repeal was approved in December 2017 and took effect in early summer of 2018. This decision sparked efforts at the state level. States began drafting their own Net neutrality rules to prohibit Internet providers from blocking or throttling traffic running on their networks. The US senate, some technology companies and consumer groups had also fiercely opposed the repeal.

We believe that if the California bill becomes law, it will have implications for the rest of the country, as other states could follow the Golden State's lead. Either way, it's not in the interest of Internet providers to operate under a multiple set of rules. This is particularly the case for mobile carriers.

In reality, this development will have a limited immediate impact on carriers, although it could affect strategies that are currently on the drawing board. Critics of the bill include the California Cable Telecommunications Association, a lobbying group that says the restrictions would limit Internet providers' ability to recoup the costs of network improvements and thereby curb further investment. In other words, the organisation claims the new rules would ultimately be harmful to consumers.

There are, of course, political and ideological causes and repercussions with the California bill. It's a statement that could go nationwide. Carriers need to be prepared.